Homebuilders point to weather, construction costs for lagging market

Whether it’s the cold, wet start to the year or steadily increasing costs to build a home, the market doesn’t feel quite as robust as in recent years, according to some in the homebuilding industry.

“I would say it’s slower than the last four years,” said Erik Christensen, owner of Trademark Homes. “The job market is good, and unemployment is low, but cost of lots is high, and cost of construction is high.”

Christensen is the chair of the Spring Parade of Homes, organized by the Home Builders Association of the Sioux Empire Inc., which concludes this weekend from 1 to 5 p.m. Saturday and Sunday.

He also is the builder of this featured home in The Grasslands at Arbor’s Edge neighborhood on the east side. It’s an eye-popping two-story home that blends the look of a downtown loft with family-friendly amenities.

“We’re not building anything else remotely like this,” he said. “It’s built for a family, and the downstairs is great for entertaining. It’s every reason to stay home because you’ve got everything you’d ever want to do.”

In more upscale homes, he is seeing similar amenities. The houses are built so families can live, work and be entertained in the same space with a continued emphasis on indoor-outdoor living features.

Costs are continuing to increase, though.

“$1 million doesn’t go where it used to when the lots are very expensive right off the bat, and just getting the basics done isn’t cheap anymore from a framing and lumber standpoint compared to three or four years ago,” he said. “And that won’t turn around until some kind of catastrophic number change.”

Through April, the city of Sioux Falls issued building permits for 136 single-family homes, compared with 204 for the same time last year.

“This spring has been absolutely terrible – actually the last two years I think are the wettest in history – so it’s not ideal for getting houses in the ground and started,” said Ryan Brouwer, owner of Choice Builders Inc.

Brouwer built the second featured home on the Spring Parade – a 5,000-square-foot Crafstman-style home in south Sioux Falls that features a bar, movie area, wine night hangout and game area.

“A lot of people are going more for white millwork, gold fixtures, especially in lighting. I see that quite a bit,” he said. “We’ve been doing a little more luxury glam, and this incorporates that.”

He hasn’t seen much of a change in his business for the year, taking on three or four new homes and a handful of remodeling jobs each season.

“I would say remodeling is probably on the upward slope a little bit because people like where they’re at or they pick an outdated house and want to spruce it up,” he said. “In general, with houses going up, it’s just harder to build a house for less than $300,000. The material prices and the lot prices are extremely high.”

Brouwer predicts more favorable weather will help jump-start a market that has been sluggish to begin the year.

“I think it’s going to pick up, but it’s something to watch closer. Now that it’s warming up, if those permits don’t skyrocket, maybe it’s just a little indication of what could be coming.”